Application and Processing
Mortgage Brokers and Lenders – Who Does What?
Most often the mortgage broker is the first person or company you will be in contact with. This can be a local bank, credit union or mortgage company. Typically, the mortgage broker arranges loans from other banks and then sells your loan to a mortgage lender. The mortgage lender is the company who is your main contact throughout the duration of your loan. Mortgage brokers are often able to work with a number of lenders to get you the best rate. Typically, the lender pays the mortgage broker a fee for acting as the intermediary and providing all the customer service. After closing, it is the mortgage lender who receives your monthly mortgage payment.
Filling Out the Application
When applying for a loan there are standard forms to be completed. Some mortgage brokers keep these on their website so you can fill out and submit the forms online. The information will be verified and used to qualify you for your loan. It is very important to spend some time and care answering the questions accurately. When completed, it is cautioned to check and re-check your replies for errors. One number in the wrong place can make a big difference!
The mortgage broker will need copies of the documents you began gathering in the first phase of the loan process, including:
- Either TWO years of W-2 forms from your employer or TWO years of tax returns if you are self-employed
- Recent pay stubs
- THREE months bank and money market statements
- Brokerage, mutual fund and retirement account statements
- Proof of other income sources (alimony, trusts, rental income, etc.)
- Credit card statements
- Auto /boat / student / miscellaneous loans
- Drivers’ license or form of ID
- If you’re not a US citizen, a copy of your green card or visa
- Copy of any existing mortgage debts if you are applying for a home equity line of credit or secondary mortgage
The Underwriting Process
The lender will have an analyst, usually called an underwriter, “crunch” your numbers and verify your documentation to confirm your ability to repay the loan. Once you are in contract on a property, there may also be a loan approval committee which will meet to review the underwriters’ conclusions regarding your creditworthiness, and to evaluate the property on which they are lending. This is called the underwriting process, and questions are bound to arise that may need clarification from you. Be sure to return your mortgage broker’s calls promptly to keep the process moving forward smoothly. If you do not hear from your mortgage broker periodically, check in.
NOTE: At the very least you will have to provide a pre-qualification letter to make an offer on a property.
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